The three basic economic questions are what goods and services should be produced, how they should be produced, and for whom they should be produced.

The three basic economic questions are what goods and services should be consumed, when they should be consumed, and where they should be consumed.

The three basic economic questions are what goods and services should be taxed, how they should be taxed, and for whom they should be taxed.

The three basic economic questions are what goods and services should be imported, how they should be shipped, and for whom they should be shipped.

A command economy is an economic system where the government makes most economic decisions.

A command economy is an economic system where households make most economic decisions

A command economy is an economic system where all businesses are privately owned

A command economy is an economic system where prices never change

A market economy is a system where decisions are made by individuals and businesses through supply and demand.

A market economy is a system where the government sets all prices.

A market economy is a system where the government owns everything.

A market economy is a system where production is always equal.

A mixed economy combines elements of both market and command systems.

A mixed economy eliminates trade and competition entirely.

A mixed economy has no government rules at all.

A mixed economy bans buying and selling completely.

A market economy has a great deal of economic freedom, while a command economy does not provide much economic freedom.

A command economy has a great deal of economic freedom, while a market economy does not provide much economic freedom.

A traditional economy has a great deal of economic freedom, while a market economy does not provide much economic freedom.

A barter economy has a great deal of economic freedom, while a mixed economy does not provide much economic freedom.

It ensures equal outcomes for all individuals by providing the same resources regardless of circumstances.

It ensures fair access to opportunities and resources so everyone has a chance to achieve economic success, recognizing unique barriers rather than providing identical outcomes

It ensures that markets operate without government involvement or regulation.

It ensures that income and wealth are distributed evenly among all members of society.

Economic equity aims for equal access to goods and services for everyone, and a command economy is more capable of pursuing equity, while a market economy cannot guarantee equity.

Economic equity aims for equal access to goods and services for everyone, and a market economy is more capable of guaranteeing equity, while a command economy cannot pursue equity.

Economic equity aims for equal access to goods and services for everyone, and a market economy always guarantees equity, while a command economy never affects equity.

Economic equity aims for equal access to goods and services for everyone, and a barter economy guarantees equity, while a mixed economy cannot affect equity.

In a market economy, individuals and businesses are responsible for protecting themselves, while in a command economy, the government provides economic protection.

In a command economy, individuals and businesses are responsible for protecting themselves, while in a market economy, the government provides economic protection.

In a market economy, the government guarantees all protection, while in a command economy, nobody receives any protection.

In a traditional economy, individuals receive protection from trade, while in a market economy, protection is not needed at all.

slow but sustainable growth

targeted but unsustainable growth

high levels of competition

market-driven resource allocation

slow but sustainable growth

targeted but unsustainable growth

high levels of competition

market-driven resource allocation

A market economy is very efficient due to competition and free trade, while a command economy is less efficient because there is little or no competition.

A command economy is very efficient due to competition and free trade, while a market economy is less efficient because there is little or no competition.

A market economy is less efficient because competition is illegal, while a command economy is more efficient because firms always compete freely.

A traditional economy is very efficient due to free trade, while a market economy is less efficient because prices are set by planners.

Command economy

Market economy

Command economy

Market economy

In a command economy, the government determines sustainability goals, while in a market economy, firms decide whether to pursue sustainability unless regulated.

In a market economy, the government determines sustainability goals, while in a command economy, firms decide whether to pursue sustainability unless regulated.

In a traditional economy, sustainability goals are always determined by global trade, while in a market economy, firms are not allowed to decide sustainability goals.

In a command economy, sustainability is never planned, while in a market economy, sustainability is always required without any regulation.

Investment in human capital leads to a higher standard of living because education and training increase productivity.

Investment in consumer goods leads to a higher standard of living because entertainment spending always increases productivity.

Investment in natural resources leads to a higher standard of living because resources automatically create skills and knowledge.

Investment in short-term spending leads to a higher standard of living because buying more today always increases productivity tomorrow.

Specialization occurs when individuals or firms focus on a specific task, and it increases productivity by improving efficiency, skill, and output.

Specialization occurs when individuals or firms focus on many different tasks, and it increases productivity by reducing efficiency, skill, and output.

Specialization occurs when individuals or firms avoid specific tasks, and it increases productivity by eliminating practice, training, and output.

A rational decision is one in which individuals compare costs and benefits and choose the option that provides the greatest benefit.

A rational decision is one in which individuals ignore costs and benefits and choose the option that provides the greatest risk.

A rational decision is one in which individuals compare opinions and feelings and choose the option that provides the greatest confusion.

A rational decision is one in which individuals avoid comparison and choose the option that provides the greatest uncertainty.

An incentive is something that motivates behavior, where positive incentives encourage actions through rewards and negative incentives discourage actions through penalties.

An incentive is something that prevents behavior, where positive incentives discourage actions through penalties and negative incentives encourage actions through rewards.

An incentive is something that changes weather, where positive incentives increase temperatures through rewards and negative incentives decrease temperatures through penalties.

An incentive is something that controls prices, where positive incentives remove all rewards and negative incentives remove all penalties.

Demand shifts due to changes in income, tastes/preferences, prices of related goods (substitutes/complements), consumer expectations, and the number of buyers (population/demographics).

Demand shifts due to changes in interest rates, money supply, government spending, tax revenue, and the national debt.

Demand shifts due to changes in technology, input costs, producer taxes, weather.

Supply shifts due to changes in production costs, technology, government policies (taxes or subsidies), future prices, number of sellers, and natural events.

Supply shifts due to changes in income, consumer tastes, prices of related goods, expectations, and the number of buyers.

Supply shifts due to changes in unemployment, inflation, GDP growth, CPI measurement, and monetary policy decisions.

Supply shifts due to changes in consumer confidence, household spending, import demand, export demand, and trade preferences.

A price floor is a legal minimum price, while a price ceiling is a legal maximum price.

A price floor is a legal maximum price, while a price ceiling is a legal minimum price.

A price floor is a voluntary suggested price, while a price ceiling is an unlimited market price.

A price floor is a foreign exchange price, while a price ceiling is a domestic wage price.

Price Ceiling

Price Floor

Price Ceiling

Price Floor

Price floors cause a surplus, and price ceilings cause a shortage.

Price floors cause a shortage, and price ceilings cause a surplus.

Price floors cause a shortage, and price ceilings cause equilibrium.

Price floors cause equilibrium, and price ceilings cause a surplus.

A sole proprietorship has one owner, a partnership has two or more owners, and a corporation is owned by shareholders.

A corporation has one owner, a sole proprietorship has two or more owners, and a partnership is owned by shareholders.

A sole proprietorship has many owners, a partnership has one owner, and a corporation is owned by only one shareholder.

A nonprofit has one owner, a franchise has two or more owners, and a trust is owned by shareholders.

Sole proprietorships have the greatest liability, while corporations have the lowest liability due to limited liability.

Corporations have the greatest liability, while sole proprietorships have the lowest liability due to unlimited liability.

Partnerships have the lowest liability, while corporations have the greatest liability due to personal liability for shareholders.

Sole proprietorships have the lowest liability, while corporations have the greatest liability due to shared liability protections.

Sole proprietorship

Partnership

Corporation

Nonprofit

Corporations have the slowest decision-making process, while sole proprietorships have the quickest.

Sole proprietorships have the slowest decision-making process, while corporations have the quickest.

Partnerships have the quickest decision-making process, while corporations have the quickest decision-making process.

Corporations have the quickest decision-making process, while sole proprietorships have the slowest.

Corporations experience double taxation, where profits are taxed at the corporate level and again when distributed as dividends.

Partnerships experience double taxation, where profits are taxed at the corporate level and again when distributed as dividends.

Sole proprietorships experience double taxation, where profits are taxed at the corporate level and again when distributed as dividends.

Nonprofits experience double taxation, where profits are taxed at the corporate level and again when distributed as dividends.

Perfect Competition: Many sellers, identical products, no price power, low barriers, example: agriculture.

Perfect Competition: Few sellers, unique products, high price power, high barriers, example: agriculture.

Perfect Competition: One seller, similar products, high price power, low barriers, example: agriculture.

Monopolistic Competition: Many sellers, differentiated products, some price power, low barriers, example: restaurants.

Monopolistic Competition: Few sellers, identical products, no price power, high barriers, example: restaurants.

Monopolistic Competition: One seller, unique product, high price power, high barriers, example: restaurants.

Monopolistic Competition: Many sellers, identical products, no price power, high barriers, example: restaurants.

Oligopoly: Few sellers, similar or differentiated products, high barriers, example: airlines.

Oligopoly: Many sellers, identical products, no barriers, example: airlines.

Oligopoly: One seller, unique product, high barriers, example: airlines.

Oligopoly: Many sellers, differentiated products, low barriers, example: airlines.

Monopoly: One seller, unique product, high barriers, example: public utilities.

Monopoly: Many sellers, unique product, low barriers, example: public utilities.

Monopoly: Few sellers, identical product, low barriers, example: public utilities.

Monopoly: Many sellers, identical product, high barriers, example: public utilities.

GDP is the total value of all final goods and services produced within a country in a given

year.

GDP is the total value of all intermediate goods and services produced outside a country in a given year.

GDP is the total value of all final goods and services produced worldwide in a given year.

GDP is the total value of all used goods and services traded within a country in a given year.

Consumer spending + government spending + savings + imports

Consumer spending + business investment + government spending + (exports – imports)

Consumer spending + business investment + taxes + exports

Consumer spending + government spending + imports – exports

Final goods and services produced domestically.

Intermediate goods and services produced domestically.

Final goods and services produced only in foreign countries.

Used goods and services produced domestically.

Used goods, intermediate goods, transfer payments, and illegal activity.

Final goods, domestic production, legal services, and consumer spending.

New goods, government purchases, business investment, and net exports.

Wages, salaries, profits, rents, and interest from production.

Real GDP is GDP adjusted for inflation.

Real GDP is GDP adjusted for exports only.

Real GDP is GDP adjusted for population only.

Real GDP is GDP adjusted for imports only.

Unemployment occurs when individuals who are willing and able to work are actively seeking employment but cannot find a job.

Unemployment occurs when individuals who are unwilling and unable to work are actively seeking employment but cannot find a job.

Unemployment occurs when individuals who are willing and able to work are not seeking employment and cannot find a job.

Unemployment occurs when individuals who are willing and able to work are employed full-time and cannot find a second job.

Inflation is the general increase in prices over time, reducing purchasing power.

Inflation is the general decrease in prices over time, increasing purchasing power.

Inflation is the general increase in wages over time, reducing purchasing power.

Inflation is the general decrease in wages over time, increasing purchasing power.

Consumer Price Index; changes in the average price of a basket of consumer goods and services

Cost Performance Indicator; the efficiency of project cost management

Corporate Profit Index; the profitability of corporations

Consumer Product Inventory; the quantity of products available for consumers

Consumer Price Index and measures changes in the average price of a basket of goods and services.

Consumer Profit Indicator and measures changes in the average profit of a basket of goods and services.

Corporate Price Index and measures changes in the average price of a basket of corporate goods and services.

Consumer Purchase Indicator and measures changes in the average purchases of a basket of goods and services.

The four types are frictional, structural, cyclical, and seasonal unemployment.

The four types are frictional, voluntary, monetary, and seasonal unemployment.

The four types are structural, tariff, cyclical, and fiscal unemployment.

The four types are cyclical, inflationary, structural, and trade unemployment.

Unemployment caused by long-term economic decline in an industry

Unemployment caused by seasonal changes in demand

Unemployment that occurs when people are between jobs or entering the workforce

Unemployment caused by a recession

Unemployment caused by workers voluntarily leaving their jobs

Unemployment caused by a mismatch between workers’ skills and available jobs

Unemployment caused by changes in the business cycle

Unemployment caused by seasonal weather patterns

Unemployment caused by technological changes

Unemployment that occurs during economic downturns or recessions

Unemployment caused by people searching for new jobs

Unemployment caused by seasonal industries

Unemployment caused by a lack of worker skills

Unemployment caused by economic recessions

Unemployment that occurs when industries slow down at certain times of the year

Unemployment caused by workers changing careers

A factory worker loses their job because machines replaced their work

A construction worker is laid off during the winter

A recent college graduate is temporarily unemployed while searching for their first job

A worker is laid off due to an economic recession

A retail worker quits one job to look for another

A worker loses their job because their skills are no longer needed due to new technology

A ski instructor is unemployed during the summer

A worker is laid off during an economic downturn

A worker leaves a job to move to a new city

A farmer is unemployed after the harvest season

A worker is laid off because the economy enters a recession

A worker’s job is replaced by automation

A worker is unemployed while searching for a better-paying job

A factory worker loses a job due to declining demand from a recession

A cashier loses their job because of self-checkout machines

A lifeguard is unemployed during the winter months when pools are closed

Fiscal policy

Monetary policy

Trade policy

Foreign policy

The Federal Reserve manages monetary policy to promote stable prices, maximum employment, and economic stability.

The Federal Reserve manages fiscal policy to promote stable prices, maximum employment, and economic stability.

The Federal Reserve manages trade policy to promote stable prices, maximum employment, and economic stability.

The Federal Reserve manages tax policy to promote stable prices, maximum employment, and economic stability.

The Federal Reserve raises interest rates to contract the economy.

The Federal Reserve lowers interest rates to contract the economy.

The Federal Reserve freezes interest rates to contract the economy.

The Federal Reserve eliminates interest rates to contract the economy.

The Federal Reserve lowers interest rates to expand the economy.

The Federal Reserve raises interest rates to expand the economy.

The Federal Reserve freezes interest rates to expand the economy.

The Federal Reserve eliminates interest rates to expand the economy.

the interest rate at which depository institutions lend balances to each other overnight

the rate charged by the Federal Reserve to commercial banks for short-term loans

the interest rate paid by the government on treasury bonds

the rate at which consumers borrow from commercial banks

The Federal Reserve primarily uses open market operations by buying or selling government securities.

The Federal Reserve primarily uses price floors and ceilings by buying or selling consumer goods and services.

The Federal Reserve primarily uses tariffs and quotas by buying or selling imported goods and services.

The Federal Reserve primarily uses subsidies and embargoes by buying or selling wages and salaries.

The Fed buys securities to increase money supply and sells securities to decrease it.

The Fed sells securities to increase money supply and buys securities to decrease it.

The Fed buys securities to decrease money supply and sells securities to increase it.

The Fed never buys securities to increase money supply and always sells securities to increase it.

Fiscal policy is controlled by the federal government, primarily Congress.

Fiscal policy is controlled by the Federal Reserve, primarily the banking system.

Fiscal policy is controlled by private businesses, primarily corporate managers.

Fiscal policy is controlled by households, primarily consumer spending decisions.

The two fiscal policy tools are taxes and government spending.

The two fiscal policy tools are interest rates and open market operations.

The two fiscal policy tools are tariffs and quotas.

The two fiscal policy tools are inflation and unemployment.

The government can raise taxes or reduce spending to contract the economy.

The government can lower taxes or increase spending to contract the economy.

The government can raise tariffs or increase exports to contract the economy.

The government can lower interest rates or buy securities to contract the economy.

The government can lower taxes or increase spending to expand the economy.

The government can raise taxes or reduce spending to expand the economy.

The government can increase tariffs or reduce exports to expand the economy.

The government can raise interest rates or sell securities to expand the economy.

A budget deficit occurs when spending exceeds revenue, while a surplus occurs when revenue exceeds spending.

A budget deficit occurs when revenue exceeds spending, while a surplus occurs when spending exceeds revenue.

A budget deficit occurs when exports exceed imports, while a surplus occurs when imports exceed exports.

A budget deficit creates national debt.

A budget surplus creates national debt.

A balanced budget creates national debt.

A trade surplus creates national debt.

There is a budget deficit, national debt still exists, and the national debt increases.

There is a budget surplus, national debt disappears, and the national debt decreases.

There is a balanced budget, national debt becomes zero, and the national debt stays the same.

There is a budget surplus, national debt still exists, and the national debt increases.

There is a budget deficit, national debt still exists, and the national debt increases.

There is a balanced budget, national debt stays the same.

There is a budget surplus, national debt still exists, and the national debt decreases.

There is a budget surplus, and the national debt increases.

Comparative advantage is the ability to produce a good at a higher opportunity cost than another producer.

Comparative advantage is the ability to produce a good at the same opportunity cost as another producer.

Comparative advantage is the ability to produce a good without any opportunity cost compared to another producer.

China has comparative advantage in cars, and the U.S. has comparative advantage in computers.

The U.S. has comparative advantage in cars, and China has comparative advantage in computers.

China has comparative advantage in cars, and China has comparative advantage in computers.

The U.S. has comparative advantage in cars, and the U.S. has comparative advantage in computers.

The U.S. should import cars and export computers because its opportunity cost of

producing cars (30 computers) is higher than China’s (10 computers), giving China a

comparative advantage in cars and the U.S. a comparative advantage in computers.

China should import cars and export computers because its opportunity cost of

producing cars (10 computers) is higher than the U.S. (30 computers), giving the U.S. a comparative advantage in cars and China a comparative advantage in computers.

The U.S. should export cars and import computers because its opportunity cost of

producing cars (30 computers) is lower than China’s (10 computers), giving the U.S. a

comparative advantage in cars and China a comparative advantage in computers.

Trade allows countries to increase total output and consumption beyond what they could produce alone.

Trade allows countries to decrease total output and consumption below what they could produce alone.

Trade allows countries to keep total output and consumption exactly equal to what they could produce alone.

Trade allows countries to eliminate total output and consumption so production is no longer needed.

Trade barriers are government restrictions that limit international trade.

Trade barriers are government rewards that expand international trade.

Trade barriers are private choices that eliminate international trade.

Trade barriers are consumer preferences that guarantee international trade.

A benefit is protecting domestic industries, and a cost is higher prices for consumers.

A benefit is lowering domestic industries, and a cost is lower prices for consumers.

A benefit is increasing competition instantly, and a cost is unlimited product choices for consumers.

A benefit is eliminating domestic jobs, and a cost is decreasing prices for consumers permanently.

Tariffs, quotas, subsidies, embargoes, and non-tariff barriers.

Prices, wages, profits, rents, and interest rates.

GDP, CPI, inflation, unemployment, and interest rates.

Exports, imports, production, consumption, and investment spending.

A government tax placed on imported goods to make them more expensive.

A legal limit on the quantity of goods that can be imported.

A payment to domestic producers to lower their production costs.

A complete ban on trade with another country.

A government tax on imported goods.

A government subsidy paid to domestic producers.

A limit on the quantity of a good that can be imported.

A complete ban on trade with another country.

A tax placed on imports to protect domestic producers.

A government payment to domestic producers to reduce costs and increase output.

A limit on the amount of goods that can be traded.

A restriction that completely bans trade.

A tax on imported goods.

A government payment to encourage exports.

A limit on the quantity of imports.

A complete ban on trade with a specific country.

A direct tax placed on imported goods.

A limit on the number of goods allowed into a country.

Regulations, standards, or rules that make imports harder without using taxes or quotas.

A government payment to domestic producers.

The U.S. government places a tax on imported steel to make foreign steel more expensive.

The government limits the number of foreign cars that can enter the country.

The government gives money to domestic farmers to lower food prices.

The government bans all trade with a hostile nation.

The government taxes imported clothing to protect domestic producers.

The government provides financial assistance to local manufacturers.

The government limits the number of foreign automobiles that can be imported each year.

The government requires strict safety inspections for imported goods.

The government bans trade with another country.

The government places a tax on imported electronics.

The government sets a maximum number of foreign goods allowed into the country.

The government gives payments to domestic farmers to reduce production costs and increase output.

The government limits the number of goods imported from a country.

The government provides financial support to domestic industries.

The government completely bans all trade with a specific country.

The government raises taxes on imported goods.

The government places a tax on imported goods.

The government limits the quantity of imported products.

The government bans all trade with another country.

The government requires imported food to meet strict safety and labeling regulations that increase costs for foreign producers.

Free trade supports low trade barriers.

Free trade supports high trade barriers.

Free trade supports no trade at all.

Free trade supports only domestic trade barriers.

Protectionism supports high trade barriers.

Protectionism supports low trade barriers.

Protectionism supports no trade at all.

Protectionism supports only international free trade.

Georgia offers major transportation and logistics advantages through ports, airports, and highway access.

Georgia offers major transportation and logistics disadvantages through ports, airports, and highway access.

Georgia offers major transportation and logistics advantages through deserts, mountains, and tundra access.

Georgia offers major transportation and logistics advantages through canals, glaciers, and rainforest access.